Trade in services is key in achieving the green transition. This report shows the role of services, and how they can contribute, with focus on the EU. However, there are barriers to trade in these services, barriers that the EU and the Member States should try to eliminate. Anna Graneli, trade policy adviser, tells more.

What is this report about?

The report is about services facilitating the green transition of the EU economy and the EU industrial ecosystems. The concept of industrial ecosystems has been introduced by the European Commission in the European industrial strategy as a key organizational and analytical tool. Now they are used in connection with several policy initiatives.

Based on the objectives of the European Green Deal, we identify a range of services that could be considered green services. These services contribute, either directly or indirectly, to making industrial ecosystems in the EU less carbon intensive, more circular and more protective of the natural environment. We illustrate how these services can contribute to addressing environmental challenges with examples from two ecosystems, namely the construction ecosystem and the energy-intensive industries ecosystem.

We also identify barriers to the free movement of green services on the Single Market and discuss how the nature of different barriers – their root cause – affects policy makers’ ability to address them.

Was there anything that surprised you along your research?

We were surprised that there were very few other studies that discussed the importance of services for the green transition in an EU context. There are several studies that analyse and exemplify the importance of services and trade in services for the climate transition – not least within the WTO context. However, very few studies take the broader objectives of the European Green Deal as a starting point.

What are the most important conclusions?

We conclude that services play a key role in achieving the green transition of the EU’s industrial ecosystems. However, barriers to the free movement of services on the Single Market risk slowing down the green transition. We also show that services can contribute in different ways. On the one hand, some services are of particular importance to the green transition of specific ecosystems. On the other hand, some services, such as waste services, business services and telecommunication services, provide vital input to the green transition of all ecosystems.

Another important conclusion is that many of the barriers reported by European companies stem from either EU regulation or national regulation. This means that there is room for the EU legislature as well as the Member State legislatures to take action to remove barriers affecting green services.

In which context do you think that this report is especially useful?

We think that the report may provide useful input to discussions within the EU on how the Single Market can contribute to the green transition. One example could be within the context of the so-called transition pathways. The transition pathways are a form of plans for the green and digital transition of each of the industrial ecosystems. The pathways are jointly created by the Commission and other stakeholders.

More generally, the report could also contribute to discussions on which actions the European Commission and the Member States should prioritize to achieve a well-functioning Single Market for green services.

What do you hope to achieve by publishing this report?

We hope that our report can contribute to a renewed focus on the importance of services in the Single Market agenda, by providing new arguments on the need for an increased level of ambition in removing barriers to the free movement of services.